The Economic Implications of Industrial Electricity/Steam Cogeneration PDF

Keywords

electricity, industry, economy

Abstract

This paper investigates the economic implications of the capital investment decision in industrial cogeneration of electric energy and steam. The influencing elements in the consideration are analyzed so that their applicability to a wider industrial spectrum can be determined especially in developing countries. The potential for gain is shown to increase with higher cost of purchased energy , reduced fuel cost, greater operating hours, increased plant load and greater steam requirement. There is consideration of the elements of value and cost as functions of the individual industrial process requirements. The individual costs, whether expended or avoided, are viewed as elements of worth in a simple cost-effectiveness model for a balance between the avoided costs versus incurred expenses. An annual before and after tax cash flow analysis is set up where the relevant elements are expressed as functions of their cost effectiveness. The direct costs are shown to be dependent on the demand and energy charges. Influence of government action on cogeneration is considered. The role of allowed tax savings element is translated into added effectiveness making cogeneration more attractive economically.